When the Defence Minister becomes soothsayer, beware

Ng Eng Hen, Defence Minister of Singapore was quoted in the news as saying:”I think that more likely than not, the prices of homes in Toa Payoh will go up. Why? Because if you look at the map, Toa Payoh is in the centre.

“North, south, east, west, whatever you build – roads and MRT – sooner or later they will have to cross Toa Payoh. That is why transportation is so easy here.”

Although i agree that Toa Payoh has a good location, but however good a location can’t beat the economics of supply and demand. With interest rates rising in the next few years, demand will be curbed and with supply increasing, prices of flats are most likely to fall. Someone may argue that HDB is not building many flats in Toa Payoh, but don’t forget a rising tide lifts all boats. Conversely, a falling tide will lower all boats. The price spread may remain between Toa Payoh flats and other flats in non-central areas but Toa Payoh flats aren’t immune from a property price fall.